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The advisory business is like any other human-intensive industry in that attracting and retaining top talent is paramount. Smart advisors know as much, but related challenges are intensifying.
Tens of thousands of U.S. advisors are baby boomers, meaning they’re getting closer and closer to retirement. Some are preparing to sell their practices to outside while others are readying transitions to current staff and/or family members. However, those scenarios don’t cover 100% of near retirement boomers. Nor do they account for the fact that fewer college students and young people are eyeing making a career out of wealth management.
Those forces and others make retention of current advisors crucial. As Andrew Blake, associate director of wealth management for Cerulli Associates,said in an interview with Morningstar, the average age of current advisors is 37. By no means old and certainly young that some of those advisors that are 37 today can not only stick around another 25 to 30 years, but they can also groom the next generation of advisors.
The key is getting them to stick with the business and with their current firms. Problem is data suggest many advisors, both employee advisors and independents, are considering moving to another place of employment.
Heed the Findings in This Survey
The recently published J.D. Power 2024 U.S. Financial Advisor Satisfaction Study indicates potential volatility is afoot in the business. Founders and principals should examine the results.
“34% of employee advisors and 41% of independent advisors who are more than two years from retirement say they may not stay with their current firm in the next one to two years. This is particularly noteworthy given that 28% of employee advisors and 52% of independent advisors have worked for three or more firms during their career,” according to the research firm.
Another major point for practice leaders to consider is that many of the employees that are thinking about leaving ultimately act on those thoughts. J.D. Power noted that half of the advisors polled in 2021 that said they probably wouldn’t be at their current 12 to 24 months later were in fact gone this year.
“At the same time, approximately nine in 10 advisors who said they ‘definitely will’ still be at their firm were still there in that same period,” according to the survey.
Culture is a contributing factor in the impetus to leave a practice. As J.D. Power notes, some advisors at independent are apt to look for greener pastures when they are dissatisfied with leadership or view the practice as heading in the wrong direction.
“Comparing ratings provided by advisors committed to staying with their firm with those open to leaving, ratings for firm leadership and culture reflect the greatest differences,” observes J.D. Power. “Among advisors who are less tenured at their firm, professional development is the area next greatest difference.”
And the Winners Are…
In any survey regarding employee satisfaction, regardless of industry, there’s a perception of winners and losers. The J.D. Power poll doesn’t specifically identify “losers,” but it mentions several “winners” by name.
Employee advisors at Stifel, Raymond James and Edward Jones are bullish on their firms and appear highly satisfied and the survey says Wells Fargo Advisors is climbing those ranks, too.
“Among independent advisors, Commonwealth ranks highest in overall satisfaction for an 11th consecutive time, with a score of 819. Raymond James Financial Services (694) ranks second, and Cambridge (676) ranks third,” according to the study.
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